The following tables represent bank balance sheets. Use them to show how the bank's balance sheet changes in each of the following scenarios. Assume the required reserve ratio is 12.5% and that the oversimplified money multiplier formula applies.

Use the following table to show how the bank's balance sheet changes if you withdraw $100 from your checking account to buy concert tickets.

Assets	Liabilities
($)	($)
Reserves: selector 1 No change $100 +$100	Checking Deposits: selector 2 +$100 $100 No change
Addendum: Changes in Reserves
Actual reserves: selector 3 $100 No change +$100
Required reserves: selector 4 No change +$87.50 $12.50
Excess reserves: selector 5 No change $87.50 +$87.50

Points:

Close Explanation

Explanation:

The ultimate effect on the money supply will be selector 1

a decrease

an increase

of selector 2

$12.50

$800

.

Points:

Close Explanation

Explanation:

Use the following table to show how the bank's balance sheet changes if Sam finds a $100 bill on the sidewalk and deposits it into his checking account.

Assets	Liabilities
($)	($)
Reserves: selector 1 {C} $100 +$100	Checking Deposits: selector 2 {C} +$100 $100
Addendum: Changes in Reserves
Actual reserves: selector 3 {C} +$100 $100
Required reserves: selector 4 {C} +$12.50 $12.50
Excess reserves: selector 5 {C} +$87.50 $87.50

Points:

Close Explanation

Explanation:

The ultimate effect on the money supply will be selector 1 {C}

an increase

a decrease

of selector 2 {C}

$12.50

$100

$800

.

Points:

Close Explanation

Explanation:

Use the following table to show how the bank's balance sheet changes when Mary Q. Contrary withdraws $500 in cash from her account at Hometown Bank, carries it to the city, and deposits it into her account at Big City Bank.

Assets for Hometown Bank	Liabilities for Hometown Bank
($)	($)
Reserves selector 1 No change $500 +$500	Checking Deposits selector 2 $500 +$500 No change
Addendum: Changes in Reserves
Actual reserves: selector 3 $500 +$500
Required reserves: selector 4 $62.5 +$62.5
Excess reserves: selector 5 +$437.5 $437.5

Points:

Use the following table to show how the bank's balance sheet changes when Mary Q. Contrary withdraws $500 in cash from her account at Hometown Bank, carries it to the city, and deposits it into her account at Big City Bank.

Assets for Big City Bank	Liabilities for Big City Bank
($)	($)
Reserves: selector 1 +$500 No change $500	Checking Deposits: selector 2 +$500 $500 No change
Addendum: Changes in Reserves
Actual reserves: selector 3 No change +$500 $500
Required reserves: selector 4 $62.5 No change +$62.5
Excess reserves: selector 5 No change $437.5 +$437.5

Points:

Close Explanation

Explanation:

The ultimate effect on the money supply will be selector 1

no change

a decrease

an increase

.